July 9, 2004

Mr. Michael J. Coffino
Steefel, Levitt & Weiss
One Embarcadero Center, 30th Floor
San Francisco, CA 94111-3719

Re: 80 Natoma - Request To Lift Suspension, Dated 7/2/04

Dear Mr. Coffino:

This is a further response to your request to lift the suspensions that are currently in effect. As I have previously advised you, I cannot allow the project to proceed until a number of troubling issues are resolved.

As you know, the project is on hold while the Department of City Planning analyzes its approvals, in order to assist me in making a final determination with respect to the Site Permit in question. You further know that the project is also on hold due to a number of concerns that have been brought to my attention since the approval of the piling addendum with respect to certain geotechnical issues and the foundation design. Please be advised that the geotechnical and foundation design issues raise serious safety concerns and as a result, the project would be on hold until they are resolved, even if there were no questions with respect to the entitlements.

As you are undoubtedly aware, this project received its approvals in record time. The application for the "revised" site permit put forth a prodigious project that was substantially different than what had been submitted in the past. The original design was for a 48-story, steel shear wall structure, with 4 levels of below-grade parking. The current design is for a 48-story, concrete shear wall structure, with 2 below-grade levels, supported on a concrete mat with short piles. The plans set forth one of the tallest and heaviest buildings in the City, and the rather unique structural design is beyond the expertise of the plan check unit here at DBI. However, despite the size of the project and DBI's unfamiliarity with many of its features, the site permit application was approved 80 days after it was filed (December 16, 2003 to March 5, 2004), and the piling addendum was approved one month later.

When we started to hear from the Myers development team ("Myers team") about their intent to proceed with the 80 Natoma project, they brought up the concept of a train traversing the property in question. In this connection, we were told that the team was confident that this could be easily incorporated into the project and they advised that we would, at some point, be asked to review and approve the plans to integrate the 2 projects. Our peer review panel was also advised of the anticipated train alignment, and they were likewise assured of its compatibility with the building as designed.

The piling addendum that provided for the work in question to commence was "provisional" in nature, and only allowed piling to "begin." Said addendum incorporated the peer review letter of April 2, 2004, which clearly indicated that review of the piling design was "ongoing" and was subject to appropriate modification. In addition, Mr. Myers and Mr. Klemencic both acknowledged to our plan check unit that the piling addendum was "conditional" and was subject to "modification."

In reviewing the various statements and conclusions of the Myers team, and comparing them to what others have stated on the various subjects, I find the following:

1. The Myers team was confident that they knew the properties of the soil at 80 Natoma, despite the fact that they only had 4 borings at the corners of the property, three of which stopped at the top of the Old Bay Clay ("OBC") and only one of which went to bedrock. Furthermore, they have no consolidation tests of the OBC on the subject property and only one strength test, which indicates that the soil is unstable.

Virtually all of the experts who have looked at this question are of the opinion that the soil studies conducted to date are insufficient to adequately assess the performance of the foundation as designed. It appears that the Myers team now agrees, as they have recently asked for, and obtained, my permission to conduct additional borings and to do further soil analysis. Shah Vahdani, the soils expert on the DBI Peer Review Panel, was pleased that additional soil analysis was going to be done, and he has indicated that he is going to contact the Myers team to share his thoughts as to the extent of the borings and the testing protocols to be employed.

2. The Myers team concluded that the depth of the OBC is 90 feet.

Other experts have indicated that there is no way of knowing this from the borings that have been done to date. In addition, said experts have indicated that there is no way of knowing the variations in the thickness of the OBC, which is important to know in order to be able to assess the probability and the severity of differential settlement.

3. The Myers team concluded that the proper Recompression Ratio to use for the 80 Natoma OBC is .02.

The soil expert on DBI's Peer Review Panel disagrees; he concurs with the MIT experts retained by the TJPA, who conclude that the proper Recompression Ratio to use for the soil in question is .03.

4. The Myers team concluded that they can eliminate any heave of the soil during excavation and construction.

The MIT experts retained by the TJPA disagree. They do not believe that heave can be eliminated prior to the mat being poured, and they further believe that the contour of the heave will result in some post-construction settlement. These MIT experts are well-respected in the field and we must give serious consideration to their opinions.

5. The Myers team concluded that the maximum settlement of the 80 Natoma building will be 3 inches, one half of which will occur during construction and one half thereafter.

The MIT experts have opined that the building settlement will be in the 6 to 11 inch range. While certain members of the Myers team have taken issue with these conclusions as being the work of "professors,” I have heard that some members of the Myers team have recently asked these experts to conduct some soil and foundation calculations for Myers.

6. The Myers team concluded that there will no differential settlement of the mat and no significant differential settlement between the mat and the adjacent garage.

The MIT experts have concluded that there will be significant differential settlement of the building mat itself, and significant differential settlement between the mat and the structure to the south, be it a garage or a train tunnel.

7. The Myers team initially believed that the Transbay group could excavate adjacent to the 80 Natoma building after it was constructed, using standard shoring procedures.

It appears that every expert who has looked at this question has concluded that the mining or tunneling that would take place for the train tunnel would have the potential of causing the building foundation to fail, with catastrophic results. I understand the Myers team has abandoned this idea.

8. The Myers team concluded that a train tunnel could be constructed at the southeast quadrant of the property if a Secant, cut-off wall to bedrock is constructed adjacent to the building foundation.

Shah Vahdani, the soils expert on the DBI Peer Review Panel, disagrees with the Myers team on this idea. He is of the opinion that the proximity of the wall to the foundation will produce more resistive soil on the south side of the structure, which, in turn, will cause the foundation mat to tilt to the north during settlement of the building, and this will be exacerbated during seismic events. Mr. Vahdani strongly opposes this Myers team proposal.

9. The Myers team rejected the idea of extending the piles to bedrock, because they believe that soil resistance would prevent them from reaching bedrock and because attempting to drive piles would produce unacceptable vibration.

Mr. Vahdani disagrees with the Myers team as to both of their justifications for not going to bedrock. Mr. Vahdani has stated that H piles could easily be driven to bedrock, and since these piles are non-displacing, they would not produce any perceptible vibration.

There are a number of other unanswered questions, including the shear strength of the mat, how the system will handle uplift, how an anticipated "pile cluster effect" will affect the performance of the foundation, etc. I have also learned that the Myers team recently asked, in a cost-saving effort, to revise the piles by removing most of the rebar from the interiors, which will be handled by the welding of steel caps to the tops of the piles for attachment to the foundation mat. As yet, we have not had an opportunity to assess the adequacy of this new proposal.

It appears that the Myers team is attempting to construct the building on the most economical foundation that can be approved. That is certainly their right. But in view of the design of the foundation and the soil that will be supporting it, I must insist that we have a good analysis of the soil at 80 Natoma and a good understanding as to how the foundation will perform in that soil, before I will consider reissuing the piling addendum.

In hindsight, I believe that our plan check unit was pressured into issuing the piling addendum long before it should have been issued, and I can assure you that this will not happen again.

Very truly yours,

Frank Y. Chiu, C.B.O.

cc: Judy Boyajian, Esq.